An Introduction to Credit Card Insurance

Are you terrified of drowning in a sea of credit card debt in the near future?

Your fear is completely justified as 55% of Americans with credit cards have debt, says a report by CNBC. The average balance on a credit card is also rising at a steady pace. California, Nevada, Florida, Georgia, and New York are some states with average credit card balances of more than $7000. This is a worrisome situation. Imagine what would happen if any of these credit card users lost their job, got injured in an accident, or suffered from a critical illness? How would they pay off their balances?

What is Credit Card Insurance?

Credit card insurance, also sometimes referred to as balance protection insurance, pays off your outstanding balance or monthly bills in the event that you were to lose your source of income. If the unexpected was to happen and you were unable to make monthly payments to your credit card issuer, the credit card insurance company will take care of it while you get back on your feet. However, every credit card insurance policy has a limit up to which it can support you.

What does Credit Card Insurance cover?

1) Accidental death

Accidental death is an unnatural death caused by unforeseen events such as road accidents, falling off a staircase, or food poisoning. Most credit card insurance providers like American Express will offer to take care of 100% of your credit card balance.

2) Involuntary unemployment

Involuntary unemployment occurs when a person is qualified for a job position but is unable to find a job opening or clear an interview. Most often, employees find themselves in such a situation as a result of a mass layoff in the company they work for.

Bear in mind that, in such a circumstance, no credit card insurance company is going to make the total monthly payments toward your credit card. However, they will lessen the financial load on you by paying 10-20% of your monthly bills.

3) Temporary total disability

A temporary total disability is a situation where a person is totally immobile for a fixed period. The immobility is typically the result of a bone fracture, illness, or mental problems. The insurer will pay 10% of your monthly credit card payments until you are fit to work again.

4) Permanent total disability

Unlike temporary total disability, a permanently disabled person will never be able to perform any of their job duties. Unfortunately, they won’t be working ever again in their life. If you were to be in such a tough position, your insurer promises to take care of all your credit card debt. The premiums in this policy are much higher as compared to the others listed.

Do I really need to purchase Credit Card Insurance?

Most often, people need Credit Card Insurance in tough times. If the sole breadwinner of the family gets injured or suffers a stroke, the entire family’s attention drifts towards their health and it becomes difficult to continue making monthly payments. This is where Credit Card Insurance comes into play. Your insurer will help to make sure you don’t drown in a sea of credit card debt.